I have a couple covered calls at the 132.5 strike expiring Jan 16th. I’m down about $1700 with Amazon breaking out the last couple of days (if I close them at the $241 closing price today). I don’t really want my shares to be called away. Debating whether to roll up to 250 with expiration mid February or roll up and out more to 265 expiration mid April. Both options result in a very minimal credit. My original plan was to keep the shares for upside while also earning some premiums (apparently I got too comfortable with the higher Delta the past few weeks ). Thoughts on the best approach?
Posted by Aliciarachel7
3 Comments
Roll within 8 weeks so theta kicks in and hope there is a lull or dip to buy back the contract with minimal loss. Depending on your cost basis, it may be cheaper than letting the shares go.
>I don’t really want my shares to be called away.
Then don’t sell covered calls.
Or do call credit spreads instead
You have no upside to keep. It’s gone already. It’s been gone for more than a year at least and you’ve just been keeping deadweight on your account consuming your capital that you could have deployed elsewhere.
I am being harsh so you never make this mistake again.
Time is a worse enemy than delta. Try to roll as close to expiration as you can afford and then as OTM as you can afford.
Feb seems ok. Let theta do its thing. Sell more OTM than $250. Watch and hope the price drops.